In late March, the Biden Administration released its Interagency Task Force on Property Appraisal and Valuation Equity (PAVE) report. Designed to mitigate bias in the real-estate appraisal process, the report recommended a multi-pronged approach to change how homes are valued and sold in the United States. Among other crucial steps, it called for greater diversity within the appraisal industry, quality-control guidelines for automated appraisals, as well as an appeals process for homeowners who think their home has been undervalued.

The PAVE report could drastically change how homes are bought and sold in the U.S. and address a long history of discrimination against minority homeowners—especially if PAVE’s recommendations are codified into law. That’s a big if when Congress has a hard time agreeing on, well, almost anything. So what can be done to improve housing in the meantime?

Kenon Chen, Executive Vice President of Corporate Strategy at Clear Capital, a Nevada-based leader in real estate valuation technology, thinks proptechs can begin to actualize the PAVE report’s long-term goals. In an interview with The Financial Revolutionist, Chen offered his key takeaways from the report, shared Clear Capital’s response to PAVE, and suggested ways proptechs can address bias in housing through thoughtful tech developments.

This interview has been edited for length and clarity.

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The Financial Revolutionist: What sticks out to you in the PAVE report?

Kenon Chen: Every borrower, every homeowner, deserves a credible, unbiased opinion of their property's value. It’s very exciting to see this issue be looked at seriously on a national level, coming all the way from the White House. It elevates the opportunity for modernisation of the appraisal process in a way that actually creates more credibility.

There are certain points within the report that we’ve advocated for at Clear Capital. Focusing on increasing appraiser diversity and equity, for example; we believe a key to success is having appraisers reflect the communities in which they serve, including training appraisers on standards and qualifications that ensure fairness and objectivity.

Are there details within the report you think are undervalued?

Part of the report that maybe didn't get as much attention is the work that's being done to modernize the actual process of doing the appraisal itself. There’s historically been very little movement to innovate within the space. Now there’s the idea of a risk-based set of appraisal options based on digital technology, a standardized way of gathering data at the home.

It can be an objective way that can be presented to not only the appraiser, but also to other people downstream in the process. Hybrid appraisals, desktop appraisals, and other methods can empower people to collect data using mobile technology and 3D technology. We're making investments into that space right now, and not waiting for the dust to settle with what might come out of this report as a next step. These are tangible things that we can all do today to improve the accuracy of the process, and ensure every neighborhood has the same opportunity for an accurate result.

What kind of role has Clear Capital had in trying to shape these new recommendations?

We’ve partnered with the Appraisal Institute, the National Association of Minority Mortgage Bankers, and other groups to increase appraiser diversity. And we participated in multiple listening sessions with the PAVE Task Force.

We were pleased to see some of our recommendations for the reconsideration of value process make their way into the PAVE action plan. There'll be a standardized way in which borrowers will have clarity on what steps to take when they have concerns about an appraisal value, and setting standards for how the lender and the appraiser handle that.

Many critics of automation are very cautious about expanding automated processes due to the potential for expanded racial bias. What do you make of that: Is there anything about the home appraisal process that you think makes automation bring about a positive social effect?

There's opportunity to have the appraisal process include more science and less art, and to standardize how data is collected. We're at a point where technology gives us the tools to enable a standardized approach to capturing the physical characteristics of the home. We’re pleased to see folks like Fannie Mae adopt the ANSI standard for measuring homes, which helps produce the same result across appraisers.

The idea of automating that capture, producing a more consistent and repeatable result, is a great way to raise the threshold that bias would have to jump over. It doesn’t give bias a place to hide by increasing the amount of science in the process.

What do you see coming down the road? Where do you think housing will be ten years from now because of the PAVE report?

It’s really the starting point of an industry-wide discussion on how to attain these goals. And, for us, that means not sitting on the sidelines or waiting until it's all said and done, but taking actionable steps right now to prove out new methods to show how they're already working. So that's why we've been investing in appraisal modernization: investing in the digitization of the process, investing in automated quality-control tools to detect whether an appraisal is coming in undervalued or overvalued.

We’re also investing in AI and machine learning to understand the commentary of the appraisal. We've been working on automated collateral underwriting technology that would use natural language processing and other modern technology methods to ensure bias doesn’t happen there. Even before new policies are put in place or new legislation is introduced, there are steps that we can take right now to be proactive, to increase accuracy and to reduce the likelihood of bias.

What do you think other proptechs should be doing to support the PAVE report’s recommendations, letting them play out in real life?

It’s important that proptech companies—those that have more leeway to innovate—think about not just the innovation of the solution, but think about what it takes to actually adopt that solution. How do we enable lenders to adopt these new policies at scale? I think that proptech companies play a huge role in bridging the gap between what happens during the real estate transaction and the listing process, and then what happens downstream for the mortgage process to allow lenders to better adopt these methods.

I don't think we need to wait for the perfect policy to take a proactive approach. We can say that every borrower deserves an accurate opinion of value, regardless of what neighborhood they live in.